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Peter Has an Endowment of 3 Units of Good X

question 9

Essay

Peter has an endowment of 3 units of good x and 5 units of good y.He can buy and sell x at a price of $100 and y at a price of $200.He receives an income of $700 as alimony from a former spouse.
a.Draw Peter's budget line for x and y.Show his initial endowment of x and y on your diagram.
b.Calculate the amount of x that he could afford if he bought only x and the amount of y he could afford if he bought only y.
c.Write an equation for Peter's budget.


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